What Is the Patriot Express Loan?
As of June 28, 2007, the SBA 7(a) Loan Program (the most common and popular program offered by the SBA) offered the Patriot Express Loan. Like most loans, there was no absolute guarantee of approval, but the goal of the Patriot Express Loan was to speed up military veterans’ access to business capital. They offered one of the SBA’s fastest turnaround times for loan approvals. The Patriot Express Loan Program was based on, and enhanced the guarantee and interest rates of, the already successful SBA Express Loan Program.
In order to qualify, a veteran needed to own the majority of his or her business. They also needed to be on active duty (and in the Transition Assistance Program), in the National Guard, service disabled, or a reservist. Spouses of the above, as well as widowed spouses of those who passed away in service were also eligible. Dishonorable discharge was a deal-breaker.
The Patriot Express Loan allowed military business owners both term loans and lines of credit for financing up to $500,000. That money could be used for startup costs, or to purchase business inventory or commercial real estate. Debt refinancing was also an option.
The main benefits of the Patriot Express Loan were:
Being approved for larger amounts of financing, and at lower interest rates
More efficient loan processing
Just how good of a deal was it?
The SBA Patriot Express Loan Program streamlined the loan application and approval processes. It was possible for Veterans to get approved for financing in as little as 36 hours. Veterans could apply for loans up to $500,000 and get a low interest rate with as little as zero fees. While the guarantee fee started out at 3% for loans between $150,001 and $350,000, that fee was later reduced to 0%.
Where did the Patriot Express Loan program go?
On December 31, 2013, the Patriot Express Loan Program ended after more than six years of providing opportunity for active service members, military spouses, and veterans.
In 2013, the GAO (Government Accountability Office) recommended that the “SBA Should Evaluate the Program and Enhance Eligibility Controls.” The GAO found that, except for the loans approved in 2007 (the pilot year of the program), loans approved under the Patriot Express Loan Program defaulted at a much higher rate than regular SBA 7(a) loans or even SBA Express Loans. The overall default rate for Patriot Express Loans was especially high for loans less than $25,000. Another red flag was that the SBA couldn’t confirm all borrowers’ continuing eligibility once the loan was approved.
Are There Alternatives to the Patriot Express Loan Program?
There are a number of resources still available for business-minded veterans who are looking for funding for their dreams.
SBA Express Loan Program
The SBA Express Loan Program gives veterans access to as much as $350,000 in as little as 36 hours (similar to the old Patriot Express Loan), if approved. Neither is there any upfront fee to the borrower for all approved loans up to $350,000. When the loans are less expensive for the borrower, more veterans are likely to apply for capital to go into business. Since 2009, SBA has nearly doubled its lending support to veteran-owned businesses.
A veteran-owned and run online auction marketplace which connects veteran entrepreneurs looking for financing with investors wanting to fund small businesses. StreetShares has a fast and easy approval process, and strongly emphasizes support for veteran-owned businesses.
Service-Disabled Veteran-Owned Small Business Program (SDVOSBC)
The SDVOSBC exclusively helps veterans secure a certain number of government contracts, especially if you were injured in service.
UPS Veteran Franchise Opportunities
According to the UPS website, “Veterans are uniquely suited for solving the nation’s most pressing challenges and this makes them incredible entrepreneurs.” So UPS offers veterans looking to open a UPS franchise a $10,000 franchise fee discount as well as a 50-75% initial application fee discount.
Hivers and Strivers
If you graduated from a U.S. military academy, Hivers and Strivers provides funding for startups run by academy graduates. This angel investment group focuses on supporting West Point, Annapolis, Air Force, and Coast Guard graduates.
Military Economic Injury Loans (MREIDL)
If you’re a veteran within one year of being released from active service, and your business was affected when you were called into active duty, you may want to check your eligibility for a low-interest Military Reservist Economic Injury Disaster Loan. Some collateral may be required depending on the funding you’re looking for, and you’ll need to prove that your business can’t recover without government help, but it’s definitely an option to consider!